ACKNOWLEDGEMENT

Preparing a project of this nature is an arduous task and I was fortunate enough to get support from a large number o persons. I wish to express my deep sense of gratitude to all those who generously helped in successful completion of this report by sharing their invaluable time and knowledge. It is my proud and previledge to express my deep regards to Respected HOD Prof. Y.S. Thakur, Head of Department Miss. Devagya Shrivastava Department of Business Management , Dr. Hari Singh Gour University Sagar for allowing me to undertake this project. I feel extremely exhilarated to have completed this project under the able and inspiring guidance of Miss. Devagya Shrivastava she rendered me all possible help me guidance while reviewing the manuscript in finalising the report. I also extend my deep regards to my teachers , family members , friends and all those whose encouragement has infused courage in me to complete to work successfully.

(PARMANAND GOUND) B.B.A II Semester

DELCLARATION BY THE CANDIDATE

Date : I declare that the project report titled " ASIAN PAINTS " on Market Segmentation is nay own work conducted under the supervision of Miss. Devagya Shrivastava Department of Business Management Dr. Hari Singh Gour Uniersity Sagar To the best of my knowledge the report does not contain any work , which has been submitted for the award of any degree , anywhere.

(PARMANAND GOUND) B.B.A IInd Semester

CERTIFICATE
The project report titled "ASIAN PAINTS " been prepared by Mr. Parmanand Gound B.B.A II Semester , 16th Batch under the guidance and supervision of Miss. Devagya Shrivastava for the partial fulfillment of the Degree of B.B.A.

Signature of the Supervisor

Signature of the Head of the Department

Signature of the Examiner

PREFACE

As a Student of B.B.A. (Hons.) 16th Batch, the survey on Company Profile on Asian Paints has been provide to me by my department, under the guidance of Miss. Devagya Shrivastava. I conducted this work in Sagar City. It presents synoptic review the research methodology. Objective, limitations and regarding the existing product. A field survey was conducted with the help of questionnaire in Sagar City. The main aim of this survey is to know about the level of Company Profile on Asian Paints in Sagar City. it also includes product utility.

PARMANAND GOUND BBA II SEM. 16TH BATCH

TABLE OF CONTENTS

TOPIC 1. 2. 3. 4. 5. 6. 7. 8. 9. 10 11 12 13 14 15 16 17 Preface Acknowledgement

TITLE

Page No.

Declaration of the Candidate Certificate Scope of the Study Introduction of Asian Paints History of Asian Paints Research Methodology Market Segmentation Company Comparison Data analysis & Interpretation Swot Analysis of Asian Paints Findings Limitation of the Study Conclusion Bibliography Questionnaires

SWOT ANALYSIS

STRENGTHS

WEAKNESS

Core knowledge of Asian Paints

High price (Paints)

Limited differentiation

Product as competitive advantage Strong Brand Image Product Development Strength Strong Distribution Network Highly Advertised

OPPORTUNITIES Market Development Export opportunities. Innovation Increasing income level of the middle class

THREATS Existing Competition Highly Amount Spend on Advertisement

INTRODUCTION OF ASIAN PAINTS

A major focus of channel of distribution is delivery. It is only through distribution that public and private goods and services can be made available for use or consumption. Producers of such gods and services are individually Asian Paints able of generation only the form or structural utility for their products and services. They can organize their production Asian Paints abilities in such a way that the products they have developed can, in fact, be seen, analyzed and sold in the market. The emergence and arrangement of a wide variety of distribution oriented institutions and agencies, typically called intermediaries because they stand between productions on the one hand and consumption. Intermediaries can improve the efficiency n the other, can be explained in the They help in the proper arrangement of routes of transactions. They help in the searching process. They help in the sorting process.

following terms: of the process.

Marketing channels are set of interdependent organizations involved in the process of making a product of service available for use or consumption. According to American Marketing Association, A Channel of distribution, or marketing channel, is the structure of intra-company organization units and extracompany agents and dealers, wholesale and retail through which is a commodity, product or service is marketed.

According to Phillip Kotler, Every producer seeks to link together the set of marketing intermediaries that best. Fulfill the firms objectives. This set of marketing intermediaries is called the marketing channel (also trade channel of channel of distribution). According to William J Stanton, A channel of distribution for a product is the route taken by the title to the goods as they move from the producer to the ultimate consumers or industrial user.

HISTORY

INFORMATION: Middlemen have a role in providing information about the

market to the manufacturer. Developments like changes in consumer demogr Asian Paints hy, psychogr Asian Paints hy, media habits and the entry of a new competitor or a new brand and changes in customers preferences are some of the information that all manufacturers want. Since these middlemen are present in the market place and close to the customer they can provide this information at no additional cost. PRICE STABILITY: Maintained price stability in the market is another function

a middlemen performs. Many a time the middlemen absorb as increase in the price of the products and continue to charge the customer the same old price. This is because of the intra-middlemen competition. The middleman also maintains price stability by keeping his overheads low. PRIMITON: Promoting the products in his territory is another function a

middleman performs. Many of them design their own sales incentive programmes, aimed at building customers traffic at the other outlets. FINANCING: Middlemen finance manufacturers operation by providing the

necessary working cAsian Paints ital in the form of advance payments for goods and services. The payment is in advance even through the manufacturer may extend credit, because it has to be made even before the products are bought, consumed and paid for by the ultimate customer.

TITLE: Most middlemen take the title to the goods, services and trade in their

own name. This helps in diffusing the risks between the manufacturer and middlemen. This also enabled middleman to be in physical possession of the goods, which in turn enables them to meet customer demand at vary moment it arises. HELP IN PRODUCTION FUNTION: The producer can concentrate on the

production function leaving the marketing problem to middlemen who specialize in the profession. Their services can best utilized for selling the production where the rate of return would be greater. MATCHING DEMAND AND SUPPLY: The chief function of intermediaries is

to assemble the goods from many producers in such a manner that a customer can affect purchases with ease. According to Wroe Alderson, The goal of marketing is the matching of segments of supply and demand. PRICING: In pricing a product, the producer should invite the suggestions from

the middlemen who are very close to the ultimate users and know what they can pay for the product. Pricing may be different for different markets or products depending upon the channel of distribution.

SCOPE OF THE STUDY The study was done primarily with the following objective in mind. To study the brands of Two-Wheeler & consumers perception Aabout the product of Two-Wheeler. To know why people buy Two-Wheeler and why some people prefer other company. To study the features of different brands that give a good idea of various products and services offered by the company. To understand the competitive environment in which the company is operating and is desired to meet customer need and satisfaction. To provide useful information to the company about the product features of various competing companies.

LIMITATIONS OF THE STUDY

The method will be unsuitable if the number of persons to be surveyed is very less as it will be difficult to draw logical conclusions regarding the satisfaction level of customers. Interpretation of data may vary from individual depending on the individual understanding the product features and services of the company. The method lacks flexibility. In case of inadequate or incomplete information the result may deviate. It is very difficult to check the accuracy of the information provided. Since all the products and services are not widely used by all the customers it is difficult to draw realistic conclusions based on the survey.

RESEARCH METHODOLOGY
Asian Paints segment the market based on the usage : BRAND POSITIONING It is how the Asian paints enabled people to form a mental image for their products in the customers mind. The strategies that they followed where as follows, Brand Image The ways in which Asian Paints attempted to meet the customers psychological and social needs.Indian paint industry is a low involvement industry. Till 1990s people will just tell their budget for painting their house to their contractors. And few customers will also mention the colour they need. During that period Asian Paints analyzed the customer market and found that people where not brand conscious but their concern was only the price of the paint. To meet this needs of the customer Asian paints reduced the cost of the raw materials by backward integration in order to reduce the cost of the paints Established an advertising strategy with created an emotional touch among the customers All these strategies helped them in creating a Brand Image for their products among people and people started realizing the need for brand conscious in this industry.

Umbrella Brand In 2004 the company realized that though they have almost 20 brands only few products like Apex emulsion, Royale interior emulsion, Apcolite and Touch wood had high recall among the customers. Therefore they decided to promote the brand as a whole, to create a corporate image and the various products under their Umbrella Brand Asian Paint, which became their mother brand. This created a Brand Awareness as a whole among the customers. Brand Portfolio: It was realized that instead of spending on individual brands and in promoting them it was logical to promote their corporate image and allthe brands under their umbrella brands ...

Asian Paints has embarked on an umbrella branding policy encompassing all its products and services. The project includes a new visual identity that establishes the company name as the dominant reason for purchase. Tractor, Royale, Utsav and Apcolite names are no longer the focus on the can, rather consumers will be buying "Asian Paints." Some key brand names are being retained for the time being--to signal a position in the market rather than a product or surface. For instance, Tractor will represent the "value for money" brands. The immediate advantage is obvious. Rather than spread resources thinly across brands and sub-brands, a company centric portfolio can synergize communication efforts. To be competitive in a world of fragmentation and rising costs, traditional mass media, such as television, can be prohibitively costly.

With the umbrella-branding move, Asian Paints can also afford to move forward from a mere functional platform for each individual product to the high ground of a mood-based emotional dimension. An Underlying Theme At Asian Paints, the underlying theme is "har ghar kuchh kehta hai," or "every home has something to say." The depth and texture visualized by this line goes into the customer's basic psyche of owning a home, and will carry through various messages emanating from the company, which is the leader in the decorative coatings market in India.

11.ANSOFF Matrix
Asian Paints value for the customers was build through innovative package (size),distribution , and communication .In 1970s they decide to computerize and network their 30 depots round the country ,to provide proper feedback of market needs ,resulting in quick response to meet the needs. They planned a new distribution structure , smaller packages and computerized communication networks. Asian paints differentiation strategy starts from market segment, distribution & packaging . With increasing volumes in chosen segments Asian Paints achieved economies of scale for cost leadership .With their dominant position they diversified in product range as also market and geographic segment. 1. They diversified into manufacturing raw materials for paints. 2. product diversification also included industrial paints .Now with a large market share ,they have strong distribution network even in metros.

Asian paints strategy of quick response translates into supplying 95% of the order supply in 48 hrs which is a positive competitive advantage .Their R&D has developed new products to later to industrial & scientific segments . The paint industry is in growth stage in India as construction activity has a high priority. With 27% market share, they enjoyed double the market share than their nearest competitor .In order to maintain this leadership position they have drawn up the following strategy. Asian Paints went to backward vertical integration by getting into manufacturing raw materials for paints. With liberalized economy more international brands are likely to enter the Indian markets as entry barriers are low in the Paint Industry. To keep their dominant position Asian Paints should pursue vigorous R & D for innovative products ,increase the number of depots for covering the entire country advertise separately for each market segment & average continuous market research to enhance their competitive advantage.

12.Future Plans :
The company plans to consolidate its dominant position in India by launching new products in line with the market developments in both decorative paint and industrial coating segments. The company is focusing on further improving the operations of all of its subsidiaries in India and abroad and has already launched EStrides, an ERP initiative through which all the overseas ventures are being covered for sharing of global knowledge, best practices and better control on

operations. The companys objective is to be among the top three players in each market where it is currently operating or plans to operate in the future Introducing Water based Paints Repositioning of existing Brands in Rural Market Broadening of Distribution Network Adding more choices for shades and effects Enhancing Better Quality Demand will be generated through the new constructions coming in housing and industries

MARKETING SEGMENTATION :
A flow is a set of function performed in sequence by channel members. In the flow process, producers, wholesalers, retailers and consumers are linked. The functions that need to be necessarily performed in a channel system include transfer of ownership through transportation, order processing, inventory carrying, storage, sorting negotiations and promotions. The same function in a give channel system, may be performed at more than one level and, in such a case, the workload for the function would need to be shared between channel members. A channel symbolizes the path for the movement of title, possession and payment for goods and services.

CHANNELS OF DISTRIBUTION FOR INDUSTRIAL PRODUCTS:

Figure below Shows channels commonly used is industrial marketing. An industrial-goods manufacturer can use its sales force to sell directly to industrial customers. It can sell to industrial distributors, who sell to the industrial customers, or it can sell through manufacturers representatives or its own sales branches directly to industrial customers, or indirectly to industrial customers through industrial distributors. 1-1-2-level marketing channels are quite common in industrial marketing channels.

TYPES OF INTERMEDIARIES
SOLE-SELLING AGENT/MARKETER: when a manufacturer prefers to

stay out of the marketing and distribution task, he Asian Paints points a suitable agency as his sole-selling agent/marketer and entrusts the marketing

job with him. A sole-selling agent or a marketer is usually a large marketing intermediary with large resources and extensive territory of operation. He will be having his own network of distrinutors/stokists/wholesalers, semi-wholesalers and retailers. He takes care of most of the marketing and distribution functions on behalf of the manufacturer. Obviously, a sole-selling agent/marketer will earn a large margin/commission compared to other types of intermediaries.
C & F AGENTS (CFAs): In many cases, manufacturers employ carrying

and forwarding agent, often referred to as C & F Agents, or CFAs. The CFAs can be describe as special category wholesalers. They supply stocks on behalf of the manufacturer to the wholesale sector or the retail sector. Their function is distribution. Their distinguishing characteristic is that they do not resell products, but act as the agent/representative of the manufacturer. They act so behalf of the manufacturer and as his extended arm. In essence, they are manufacturers branches.
WHOLESALER/STOKIST/DISTRIBUTOR: A wholesaler or stokist

or distributor also a large operator but not on a level comparable with a marketer of sole selling agent, in size, resources, and territory of operation. The wholesaler/stokist/distributor operates under the marketer-soleselling agent, where such an arrangement is used by the manufacturer.
SEMI-WHOLESALERS: Semi-wholeseller are intermediaries who buy

product either from producers or wholesellers in bulk, break the bulk or resell the goods (mostly) to retailers in assortment needed by them. Like the wholesalers, semi-wholesellers too perform the various wholesaling

functions that are part of the distribution process. In some cases, they may also perform the retailing functions. Their strength is specialization by region. They assist the producer in reaching a large number of retailers efficiently.
RETAILER/DEALER: retailers sell to the household/ultimate consumers.

They are at the bottom of the distribution hierarchy, working under wholesalers/stokists/distributors/semi-whosalers,as the case may be. In cases where the company operates a single-tier distribution system, they operate directly under the company. The retailers are also sometimes referred to as dealers of authorized representatives. They operate in a relatively smaller territory or at a specific location; they do not normally perform stockholding and sub-distribution functions. The stocks they keep are operational stocks necessary for immediate sale at the retail outlet.
VALUE-ADDED RESELLERS: they are intermediaries that buy the basic

product from producers and add value to it or, depending on the nature of the product, modify it and then resell it of final customers.
MERCHANTS: They are intermediaries that assume that ownership of the

goods that they sell to customers or other intermediaries. Marchants usually take physical possession of the goods that they sell.

COMPANY COMPARISON OF ASIAN PANTS

Asian Paints, Goodlass Nerolac, ICI (India), Berger, Jenson & Nicholson and Shalimar are the leading companies in the organized in the organized sector. The top six manufacturers account for about 80 per cent of the market in the organized sector in value terms. ASIAN PAINTS Threat of global competition is minimal in the industry. ASIAN PAINTS dominates the decorative segment, with a 38 per cent is the industry leader, with an overall market share of 33 per cent in the organized sector.

market share. Goodlass, a Tata

Market Shares of Five Major Players Company 1. Asian Paints 2. Goodlass Nerolac 3. Berger Paints 4. ICI Paints 5. Shalimar 6 38 14 9 9 8 Market share (%) Decorative Industrial Overall 15 41 10 9 7 33 18 9 9

company, is number two with a 14 per cent market share. Berger and ICI have 9 per cent and 8 per cent shares, respectively, in this segment followed by Shalimar, with 6 per cent.

Goodlass dominates the industrial paints segment, with 41 per cent market share. ASIAN PAINTS is a poor second here, with a 15 per cent market share. Berger, ICI, and Shalimar are the other substantive players in the sector, with 10 per cent, 9 per cent and 8 per cent shares, respectively. The dominance of Goodlass in industrial paints is largely the result of its technical association with the JAsian Paints anese paint major, Kansai Paints, which has a 29.5 per cent equity stake in the company. Goodlass has a lions share of 70 per cent in the OEM passenger car segment, 40 per cent share of two-wheeler OEM market and 20 per cent of commercial vehicle OEM market. Goodlass also holds 20 per cent to the white-goods segment.

THE COMPANY
As already mentioned, Asian Paints is Indias largest paints company and the market leader in decorative paints. ASIAN PAINTS manufactures and markets a wide spectrum of coatings and ancillaries, which include decorative, production paints and heavy-duty coatings. The manufacturing facilities of the company for paint products are currently spread over four locationsBhandup, Mumbai, which was established in 1955; Taloja, Maharashtra, where ASIAN PAINTS established its second unit in 1980; Ankelshwar, Gujrat, where operations started in 1981; and Patancheru, Andhra Pradesh, where manufacturing started in 1985. Asian Paints offers the widest range of paints in terms of products and shades, as well as pack sizes, Availability of wide range of shades is in fact,

one major critical success factor in the decorative paints business. And ASIAN PAINTS scores high in this factor. ASIAN PAINTS manufactures and markets more then 2,800 items of paints (SKU).

PERFORMANCE
ASIAN PAINTS has been consistently turning out a good performance

over the years. For more than two decades now, it has been the market leader. Besides, the company has also consistently proved its excellence in operating performance. Exhibit 1 gives details of ASIAN PAINTS s sales performance during the last four years. Exhibit 1 gives some other important details of ASIAN PAINTS performance. ASIAN PAINTS has set a target of gross sales of Rs 2,100 crore by 2003. It aims to be amongst the top ten decorative paints manufacturers in the world by 2003 and among the top five by 2005. s

ASIAN PAINTS STRIKES A NEW PATH IN DISTRIBUTION

At the time ASIAN PAINTS entered the Indian paint business, distribution was the most crucial task for any new entrant. Both physical distribution and channel management posed formidable challenges. The foreign companies

and their wholesale distributors dominated the business. The foreign companies Asian Paints pointed a few traders as their wholesale distributors and allowed them to perpetuate a situation of monopoly. Each distributor was assigned a large territory and was given the right to operate the exclusive channel of the company in the assigned territory. The trade terms were also very liberal. The companies also extended virtually unlimited credit to the distribution. The credit outstanding for the supplies made throughout the year were required to be settled by the wholesales distributors only at the year-end, at Diwali time. These distributors had neither the compulsion nor the motivation to invest in distributions infrastructure. They were not required to move out to semiurban and rural areas. They concentrated on big cities where they could make the sales without much investment in distribution infrastructure and market development. Also, they were shutting the doors on any new paint company seeking an entry into the business. In other words, these distributors controlled the paint business and were making it impossible for a new paint company to enter and establish itself in the business. ASIAN PAINTS sized up the scenario correctly and formulated a unique distribution strategy. In the normal course, a firm entering the industry in this scenario would have opted for the low risk strategy of gaining a limited access to the wholesale traders and be satisfied with a small share of the existing business. But ASIAN PAINTS went in for a strategy that differed totally from the existing pattern. ASIAN PAINTS s strategy, in fact, meant the polar opposite of the established/existing pattern.

Chart presents the elements of ASIAN PAINTS s distribution strategy. We shall see the details in the page that follow. ASIAN PAINTS Bypasses the Bulk Buyer Segment and Goes to

Individual Consumers Bulk buyer segment was the major segment of the paint business in the earlier days and any Chart Elements of ASIAN PAINTS s Distribution Strategy ASIAN PAINTS bypassed the bulk buyer segment and went to individual consumers of paints. ASIAN PAINTS went slow on urban areas and concentrated on semi-urban and rural areas. ASIAN PAINTS went retail ASIAN PAINTS went in for an open-door dealer policy ASIAN PAINTS voted for nationwide marketing/distribution Paint Company needed a share of this major segment for sheer survival. Though this segment was dominated totally by foreign companies and their wholesale distributors, a new entrant to the business like ASIAN PAINTS would normally have rushed to this segment and tried to garner a share of it. ASIAN PAINTS , however, had a totally different game plan. Seeing that this segment was not a growth segment, though it was certainly the major segment at that point of time, ASIAN PAINTS decided to ignore this

segment for the present and go to individual consumers. And that was crucial decision. It influenced every subsequent decision ASIAN PAINTS took in the realm of distribution. Over time, ASIAN PAINTS proved to the paint industry that there existed a large and bottomless segment in the paint business of India, outside the bulk buyer segment, comprising of individual consumers.

ASIAN PAINTS Goes to Semi-Urban and Rural Areas

Along with the decision to go to individual consumer segment leaving aside the bulk buyer segment, ASIAN PAINTS also decided that within the individual consumer segment, semi-urban and rural areas would constitute ASIAN PAINTS s priority market. Prior to ASIAN PAINTS s entry, the paint business was by and large concentrated in the urban areas. All the major paint companies and their wholesale distributors were content with the market that was available in the urban areas. In contrast, ASIAN PAINTS clearly saw that a large market for paints was emerging in the semi-urban and rural areas, and felt it wise to tAsian Paints this market. ASIAN PAINTS also understood that a new entrant like ASIAN PAINTS had also a compulsion to go to the semi-urban and rural areas. The major companies and their wholesale distributors were not giving any worthwhile opening in the big cities for new entrants. ASIAN PAINTS found it difficult to attract the wholesalers in the cities to deal in its products. It had to necessarily turn to the semi-urban and rural areas for support. ASIAN PAINTS wisely decided against committing all its resources on a head on collision with the foreign companies and their big wholesale distributors in the urban areas.

ASIAN PAINTS Goes Retail Going directly to retail dealers was the next major strategic decision of ASIAN PAINTS in the realm of marketing and distribution. Here too, ASIAN PAINTS totally broke with the prevailing distribution practice. As mentioned earlier, the foreign companies, who were the main players, were practicing a wholesale distributor-dependant marketing system. ASIAN PAINTS did not see any great merit in the system. It totally bypassed the well-entrenched wholesale distributors and went directly to the retailers. While ASIAN PAINTS s competitors remained content with their linkage with a handful of wholesale distributors, ASIAN PAINTS preferred direct contact with hundreds of retail dealers. ASIAN PAINTS Goes in for an Open-Door Dealer Policy ASIAN PAINTS followed an open-door policy in the matter of adding

retail dealers to its network. The prevailing trend in those days was to limit the number of dealers to the barest minimum. ASIAN PAINTS broke this trend and chose to use practically everyone in the trade, who was willing to function as its dealer. It was a combined result to the policy of going directly to retailers and the policy of open door to dealership that ASIAN PAINTS s dealer network swelled rAsian Paints idly. Even after achieving stability and maturity in distribution, ASIAN PAINTS continued to follow a policy of continuous expansion of dealer network. By 1990, ASIAN PAINTS was having a 7,000 strong dealer network. By the year 2000, the number had swelled to 12,000. And even now, on an average, ASIAN PAINTS adding 200 to 250 new dealers every year. is

ASIAN PAINTS Votes for Nationwide Marketing/Distribution

ASIAN PAINTS took yet another important and strategic decision in the realm of distribution. Those days, nationwide distribution/marketing was not the standard practice in the paint business. On the one side, there were the 1,000 odd small paint companies who, as a class, believed in marketing their paints in limited territories in and around their point of production. On the other side were the big companies, who as a class, believed in limiting their distribution to the big cities. In contrast to both these existing practices. ASIAN PAINTS voted for a nationwide distribution/marketing. It wanted to have an active presence throughout the country, in the geogrAsian Paints hical zones, states and territories. THE IMPLICATION OF ASIAN PAINTS STRATEGY ASIAN PAINTS s distribution strategy described in the preceding S DISTRIBUTION

paragrAsian Paints hs had its associated implications. ASIAN PAINTS had to take due note of them and face them squarely. Going to Individual Consumers Implied Wide Product Range and Complex Distribution Had ASIAN PAINTS concentrated on the bulk buyer segment. It could

have managed with a limited product range, at least, in the initial years. But, ASIAN PAINTS s decision to turn to the individual consumers necessarily meant a wide product range. In the nature of things, the individual consumer

segment involves a very wide choice in terms of products, materials, shades and pack sizes. On top of this, ASIAN PAINTS believed in making products based on the preferences of consumers. It gathered feedback from the consumers and turned out products, shades and pack sizes on the basis of such feedback. This policy resulted in a further burgeoning of the product range.

Smaller Packs Proliferated the Product Depth Further

At the time of ASIAN PAINTS s entry, paint companies were supplying paints in containers of 500 ml or larger. ASIAN PAINTS saw that there was a felt need in the market for paints in smaller packs. All end uses did not require a large quantity. Moreover, it was common practice for consumers to buy paint initially in a larger quantity and supplement it with small size purchase to complete the job. ASIAN PAINTS decided to harness the business opportunity and started supplying its paints in small packs-in 200 ml and 50 ml packs. This proliferation in pack sizes also contributed to ASIAN PAINTS s growing product range. ASIAN PAINTS was by now manufacturing and marketing as many as 2,000 distinct items of paints, none of which was strictly a substitute for the other. Wide Product Range Implied Distribution The policy of having the widest range of products, colurs and pack sizes had its implication on ASIAN PAINTS s distribution. When 2,000 different items had to be made available to the consumers, it automatically meant that

the company had to be prepared for high inventory holding in its various depots/retail outlets. Accounting and sales arrangements had also to be provided for on a matching level. Naturally, distribution was becoming more complex and expensive for ASIAN PAINTS . Going to Semi-Urban/Rural Markets Further Enlarged Distribution The decision to go to the semi-urban and rural markets instead of confining to the urban markets also meant enlargement of the distribution function. ASIAN PAINTS had to go in for more dealers in order to serve the scattered semi-urban and rural market. The decision also meant that ASIAN PAINTS could not opt for a simple, centralized distribution of its products form its factory. It had to go in for a decentralized, field-focused distribution, with a network of depots located all over the country/marketing territory. Without such extensive and intensive distribution network, it would not have been possible for ASIAN PAINTS markets. Going Retail Implied Deep Involvement in Channel Management Through its decision to go retail, ASIAN PAINTS involved in physical distribution and was getting deeply to cover the semi-urban and rural

Chart Main Steps in the Implementation Process

ASIAN PAINTS It established dealers. It created that a marketing matched its organization distribution. s created a of It successfully resolved the costservice conflict in distribution. (i) A strong cost commitment control to without large network of dealers. a network

company depots to service the distribution

compromising service level. (ii) Effective inventory management (iii) Effective control of credit outstanding (iv) IT initiatives in distribution cost control

Channel management. In the system chosen by ASIAN PAINTS

, the

physical distribution cum channel management task was far more demanding, compared to the wholesaler-oriented system practiced by the other paint companies. While, for companies that embraced the wholesaleroriented system, it was enough to service a handful of distributors, ASIAN PAINTS had to service a network of thousand of retail dealers. Having necessarily had to create taken the decision to go retail, ASIAN PAINTS

and service a vast dealer network. It also had to create the physical distribution facilities required for servicing such a large network.

National Marketing Necessitated Nationwide Organisation Extend of marketing territory and complexity of distribution organization are interrelated. The moment ASIAN PAINTS voted for nationwide marketing, it was getting into intensive as well as extensive physical distribution and channel management. ASIAN PAINTS distribution-cum-marketing organization. thus had to create a nationwide

DISTRIBUTION BECOMES ASIAN PAINTS S SHOWCASE FUNCTION ASIAN PAINTS s strategies made distribution the most important

elements of its marketing mix. And, ASIAN PAINTS give to distributions all the inputs that were demanded by it. In fact, the rest of this case study is essentially a description of how ASIAN PAINTS managed its distribution activities-how it chalked out its distribution programmes, how it implemented them, what problem it encountered in this task, how it tackled them and how through distribution success, it achieved marketing and corporate success. THE IMPLEMENTATION PROCESS We shall see low ASIAN PAINTS went about the actual management of s

the distribution function. The main steps in ASIAN PAINTS implementation process are shown in Chart 2. Let us see the details.

ASIAN PAINTS Creates a Large Network of Dealers An extensive network of dealers, and a matching physical distribution infrastructure play a crucial role in the decorative paints segment. This is essential for ensuring easy accessibility of the product to customers. In this, Asian Paints scored over its competitors with a massive network of 15,000 dealers spread over 3,500 towns across the country. ASIAN PAINTS network of 8,000 dealers. ASIAN PAINTS Establishes a Network of Company Depots ASIAN PAINTS established a large chain of company operated has the largest distribution network among all the players. Goodlass has a

depots/stock points throughout its vast marketing territory, from where the retail dealers could conveniently pick up their requirements. ASIAN PAINTS s basic strategies explained in the earlier sections necessitated a liberal Asian Paints proach in the matter of stock points/depots. It also meant that the depots had to be company operated. After all, ASIAN PAINTS did not have any wholesale distributors to whom the responsibility for operating the stock points could possibly have been assigned. As shown in Exhibit 32.4 established a network of 30 company-run depots, spread through out the country and serviced its retailers from them. The number of depots varied from city to city. For example, Bangalore had just one depots while Mumbai had four depots. The depots typically supplied to about 200300 dealers.

ASIAN PAINTS

Creates a Marketing Organisation that Matched its

Distribution Intensity Effective control of the large number of depots, each having substantial stocks of 2,000 odd distinct items necessitated a matching marketing organization structure. ASIAN PAINTS set up a marketing organization consisting of four regional sales offices, 35 branch sales offices and a large number of sales supervisors and sales representatives spread all over the country. The marketing organization of the company is presented in Exhibit 32.5. It can be seen from the chart that a very extensive structure has been created in the consumer division. It is primarily meant for taking care of the massive distribution task involved in this sector. Each branch sales office has its own depots and the various items are stocked in the depots under the control of the concerned branches. The branches service the dealers and customers in their territories. These are supported by six regional distribution centers, which cater to 55 depots. Each depot has a branch manager for supervision of several salesperson who cater to more than 14,500 dealers in the more that 3,500 big and small cities all over the country. ASIAN PAINTS faced many challenges. Of these, the cost-service

dilemma was no doubt, the most important one. And, that is the aspect in which we are mainly interested in this case study. Managing the cost-service conflict was the main challenge that ASIAN PAINTS faced in the implementation of its distribution strategy. ASIAN PAINTS met this challenge successfully.

We have seen that ASIAN PAINTS has over 15,000 dealers in 3,500 towns in India. ASIAN PAINTS caters to all of them directly. As a result, for ASIAN PAINTS , the distribution task gets tremendously extended and distribution cost becomes a significant business parameter. Demand for decorative paints is characterized by seasonality. Demand drops during monsoons and picks up around a month-and-a-half before the festive season. Major part of the sales take place in the second half of the financial year. Manufacturers have to array huge inventories during the lean period. As a result, distribution cost becomes all the more significant. Naturally, distribution cost emerged as a major hurdle that ASIAN PAINTS had to cross. The strategy It went in for a very high service level in distribution. Service level is measured in terms of the number of stock keeping units (SKUs) available in stock as a percentage of the number of SKUs that should have been in stock. ASIAN PAINTS s service level is more than 85 per cent whereas that of other large paint companies falls between 50 and 60 per cent. This meant a further rise in ASIAN PAINTS s physical distribution costs. ASIAN PAINTS had to resolve this cost-service conflict. In the chAsian Paints ter on Physical Distribution and Logistics

Management, we had seen that a cost-service dilemma is inherent in any physical distribution situation. A high service level in physical distributionin transportation, warehousing order processing and inventories-necessarily means a high level of costs. Every firm has to face this cost-service dilemma and work out a compromise. ASIAN PAINTS voted for a high service level

and without compromising this service level, it tried to contain the distribution costs. Interestingly. ASIAN PAINTS endeavor. When we go in to the details as to how ASIAN PAINTS actually resolved the cost-service dilemma, four factors started out: A strong commitment to distribution cost control, without compromising service level Effective inventory management Effective control of credit outstanding IT initiatives in support of distribution cost control Strong Commitment to Distribution Cost Control While following a totally customer-oriented distribution strategy, ASIAN PAINTS could not afford to ignore the cost angle. ASIAN PAINTS was in no position to pass on any additional costs to the consumers. ASIAN PAINTS s marketing philosophy demand that the consumer price of its paint should be on the lower side, so as to suit the pockets of the average Indian. Moreover, ASIAN PAINTS s business growth demand more and more investment in manufacturing and distribution. ASIAN PAINTS had to find the resources. This Asian Paints art, the intensity of competition had also been on increase. Naturally, profitability was coming under greater strain in these circumstance. ASIAN PAINTS had to control its distribution succeeded in this

costs in order to maintain its profitability and market leadership. The question was how to control the costs without sacrificing the service level. Effective Inventory Management Effective inventory management is the first major component of ASIAN PAINTS s strategy on distribution cost control. And, ASIAN PAINTS achieved high efficiency in this regard. Actually, in inventory cost, ASIAN PAINTS took the lowest position in the industry. ASIAN PAINTS s average inventory level equals only 28 days sales, while the industry average is 51 days sales. This right away provided a 45 cent edge in inventory costs to ASIAN PAINTS compared to its competitors. ASIAN PAINTS s stock of finished goods was just 7 per cent of its net sales while for the other in the industry it was nearly twice that level. What is particularly striking in this achievement is that ASIAN PAINTS offered customers and dealers a high level of service in product delivery compared to its competitors and yet kept the inventory costs down by 45 per cent compared to the competitors. Control of Credit Outstanding Large credit outstanding, running beyond two months or more, was natural concomitant of the distribution strategy chosen by ASIAN PAINTS . The dealers are required to maintain stocks of all the SKUs that are on demand in the territory. It pushes up inventory levels at the outlets. They need credit. ASIAN PAINTS allowed 15-21 days credit for dealers located in the major towns and 22-30 days credit for dealers in upcountry regions. ASIAN PAINTS had to pull of a smart credit control strategy for survival. It resolved the thorny problem through an innovative dealer incentive

scheme. ASIAN PAINTS stipulated that each of its dealers should pay for the supplies within a specified time norm and offered them an attractive incentive scheme for doing so. It consisted of two components: (a) A special discount of 3.5 per cent. This was referred to as the discount for perfection in payments. It was passed on at the end of the year, provided each and every payment throughout the year was made within the stipulated time norms. (b) A cash discount of 5 per cent. This was paid for all outright cash purchases. It was given whenever payments were received within 24 hours of the supply/invoice. In respect of outstation accounts, the payments should have been made in advance by draft in order to be eligible for the discount. The scheme was a grand success. ASIAN PAINTS s credit outstanding always stood below 25 days, while the outstanding of the other major companies were in the range of 40 days and above. Systematic computerization also helped ASIAN PAINTS outstanding within limits. IT Initiatives in Distribution Cost Control ASIAN PAINTS s IT initiatives in respect of distribution-inventory control and control of credit outstanding, in particular-helped it no control distribution costs without lowering the service level. ASIAN PAINTS went in for a fully computerized distribution system. ASIAN PAINTS did this not only with an eye on distribution cost control, but also for the sake of maintain the credit

distribution effectiveness per se. But for such an Asian Paints

proach,

ASIAN PAINTS s distribution management would have gone haywire. Here was a situation where 2,000 different items of paints, manufactured at four different plants, had to be distributed to 15,000 dealers in 35,00 towns spread all over the country. Through 55 depots. ASIAN PAINTS accomplished this, maintaining the average service level at 85 per cent, a clear 25 per cent above that of competition. The IT initiatives also ensured prompt billing, accurate customer accounting and effective control of credit outstanding. Computerization also enabled ASIAN PAINTS to process recent sales data for the 100 fastest moving SKUs. This analysis was used to project sales of specific products, which helped plan production and raw material purchases. With computerization, ASIAN PAINTS was able to analyse past trends to arrive at a 90 per cent accurate sales forecast. Corrections were made every month between the sales projection and actual sales. Production was thus evened out month-to-month. Sales statistics were maintained, classified by product, month, salesman, branch, region and dealer. Such computerized planning and control of production, sales and inventories helped ASIAN PAINTS cut distribution costs without compromising on the high level of service sought by it in physical distribution. ASIAN PAINTS later hired from the Department of Telecommunications, satellite time and got all its offices in the country networked. They transmit data daily to the corporate had office in Mumbai, which uses it for sales and production planning. ASIAN PAINTS has consistently improved its IT systems over the years. It has linked all its factories and 55 depots through

V-SAT terminals, and derived big benefits in terms of streamlined distribution. More recently, ASIAN PAINTS has implemented supply plans chain management software from i2 technologies. ASIAN PAINTS

to upgrade its communication infrastructure through VSAT leased lines and ISDN lines all over India. It is also implementing an ERP solution from SASIAN PAINTS to be completed in 2001. ASIAN PAINTS Acquires a Competitive Advantage Through Its Inventory Management and Credit Control One can grasp the full import of ASIAN PAINTS s success in this sphere only when due not is taken of the fact that ASIAN PAINTS has achieved the lowest distribution cost as well as the highest differentiated position in the industry. ASIAN PAINTS s Asian Paints colite, the largest selling brand of paint in the country, is available in different shades and in eight different pack sizes. Being in the business of colours, ASIAN PAINTS utilized colour to achieve differentiation, and none of its competitors could match ASIAN PAINTS in this aspect. Simultaneously, ASIAN PAINTS also achieved the lowest cost position in the industry. Normally, when a firm consciously opts for the differentiation route with a wide product line, it automatically point towards higher inventory levels and consequently higher inventory and other costs. But ASIAN PAINTS , through its effective distribution management, inventory management and control of credit outstanding, in particular, managed to retain its inventory size and inventory costs at the lowest possible level. ASIAN PAINTS actually saved so much on inventory carrying costs that it almost earned its promotion budget through these savings. This is again praiseworthy because ASIAN PAINTS spends as much as per cent of its

sales on promotion, the highest in the industry. It has to spend so much in order to maintain its differentiation advantage. But strikingly, it has kept its total marketing costs the lowest in the industry. The two factors together-the lowest cost position as well as the highest differentiation position-has conferred a significant competitive advantage on ASIAN PAINTS .

SHORT ANALYSIS

Robust financial performance of Asian Paints seems to have peaked out though demand conditions continues to be favourable. Asian Paints has significantly surpassed analysts estimates even after adjusting for change in the accounting period of subsidiaries for June 2009 thanks to a volume growth of over 10% and two price hikes (about 4%) undertaken in May 2010. Consolidated net sales grew a robust 25.3% year-on-year (y-o-y) and an adjusted rate of 22.8% at Rs 1,830 crore despite a higher base. This has been largely led by domestic revenues, which have grown at 28 per cent highest quarterly growth in the past two years at Rs 1,491 crore. While analysts had expected a y-o-y decline of 3% in operating profit and 200 basis points (bps) contraction in operating profit margin due to escalating raw material prices namely titanium dioxide and mineral turpentine oil (material cost index up 6.5% in the quarter), the company has in fact reported a jump of 26% in operating profit at Rs 347 crore and margins of June 2009 quarter at about 19% - one of the highest levels in past five financial years - have been maintained despite operating profit jumping 60% y-o-y last year. Even net profit margin at 12.1% has been maintained (that too on an adjusted basis) in contrast to a 30 bps dip expected by analysts despite the 20% rise in taxation. Favourable domestic demand conditions especially in decorative paints, which contributes 90% of total revenues, will continue to support high volume growth especially from tier-II and tier-III cities, though the scenario for international subsidiaries and industrial segment is still challenging and yet to pick up fully.

FINDINGS
1. he company manufactures its product in advance and they stocking to the market after two or three months, so the spoilage of the chances of product becomes higher.

2. The company doesnt provide facility of replacement of spoiled products to its retailers or distributors. 3. There is discrimination in the prices of distributors or the prices at which retailers directly purchase from the market (Distributors prices are higher than market). 4. There is no advertisement from the company like dangleas, posters, hoarding, and Neon sign boards, glow sign boards. 5. The company is not giving any motivational incentive to the retailers. 6. There is unfrequent visit from the company representative to the retailers. 7. The company has captured 72% market in the butter segment. 8. The prices should be kept low to capture more percentage of total market. 9. The company distributors do all their business in cash only.

CONCULSION

LEADERSHIP THROUGH DISTRIBUTION EXCELLENCE

The story of Asian Paints is a story of distribution excellence. ASIAN PAINTS achieved an enviable leadership position through the distribution route. While ASIAN PAINTS did not ignore any of the other function of

marketing, it was by mastering the distribution function that ASIAN PAINTS gained a distinct and powerful competitive advantage. ASIAN

PAINTS s distribution strategy was truly innovative; it broke new ground in every aspect of distribution. In the final analysis, excellence in distribution led the company to marketing and corporate excellence.

BIBLIOGRAPHY ASIAN PAINTS

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 Brown James R, Fern Edward F., Conflict in Management

Channels: The Impact of Dual Distribution. International Review of Retail, Distribution & Consumer Research, Asian Paints ril92, Vol. Issue 2, p121, 12p
Moriarty, Rowland T and Moran, Ursula Managing Hybrid

Marketing Vol. 68 Issue.

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November/December 1990,

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Marketing Management ICFAI Center for Management Research

Marketing Management Planning, Implimentation & Control by V S Ramaswamy / S Nmakumari

www.asianpaints.com www.mouthshut.com/product-

reviews/Asian_Paints_Royale_Luxury_Emulsion en.wikipedia.org/wiki/Asian_Paints www.novAsian Paints aint.org/webasia.html www.domain-

b.com/companies/companies_a/asian_paints/index.html FACULTY OF MANAGEMENT STUDY DR. HARI SINGH GOUR UNIVERSITY SAGAR (M.P.) QUESTIONAIRE
Researcher's Name : Class : B.B.A. II Sem Gender : Name of Person : ___________________ Age : _____________________________ Occupation : ________________________

Q.1

Do you know about Asian Pain ? a. Yes. b. No.

Q.2. Have you used Asian Paint ? a. Yes. b. No.

Q.3 How Often Sales Promotion Schemes are offered on Asian Pain a. 6 months 1 year b., 3-6 months Q,4. c. less than 3 months.

Rate the following factors you consider are important for building brand Image. a.Price d. Looks b. e. Clarity Quality c. Durability

Q 5.

What do you look for while purchasing Asian Pain ? Please rank in order of importance? a. c. Comparative Advantage Scheme/Discount/Free Gift b. d. Price Quality